Global

Details

  • Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/15/2013

India - Draft “safe harbour” rules, ratios for transfer prices 

August 15: India’s Central Board of Direct Taxes on 14 August 2013 issued a statement, along with draft rules, with respect to a “safe harbour” under which the tax authorities would accept transfer prices as declared for international transactions.

Public comments concerning the draft safe harbour rules are due by 26 August 2013.

Background

To limit the number of transfer pricing audits and prolonged disputes, the “safe harbour” law was enacted in India under Finance (No.2) Act, 2009.


New section 92CB was added to the Income-tax Act, 1961 (India’s tax code). The safe harbour measures had a retroactive effective date of 1 April 2009.


In July 2012, committees were established with a mandate to submit sector-wise draft reports on the safe harbour rules. Subsequently, the Indian government in September 2012 approved a suggestion of one committee to finalize the safe harbour rules for certain sectors / activities—including the IT sector, contract research and development in the IT and pharmaceutical sectors, and the auto ancillaries-original equipment manufacturer sector, and with respect to financial transactions for outbound loans and corporate guarantees.


Read an August 2013 report [PDF 225 KB] prepared by the KPMG member firm in India: Much awaited Safe Harbour Rules – draft issued for public comments



Contact a tax professional with KPMG's Global Transfer Pricing Services.




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